Why should you invest in crypto during a bear market?

Investing  in  crypto  is  less  about  thriving  in  a  bull  market,  but  more  about  entering  in  a  bear market.  Bear  markets  create  wealth-generating  opportunities,  while  bull  markets  only  create  a lot of noise. Most investors enter the crypto during a bull market, not realizing that the market's higher and lower highs limit profit potential. Bear markets, on the other hand, create lower lows and higher lows in the pool, making it the right spot for investors to enter the crypto market.

Here's  more  on  why  bear  markets  favor  investors  and  how  to  view  markets  as  long-term opportunities instead of short-term gains.

Opportunity to Create Generational Wealth?

The one question that every investor asks is: whether it is safe to invest during a bear market, and the short answer is yes. This does not mean that one should blindly put their money in any coin.  In  fact,  it's  more  about  following  time-tested  investment  disciplines  along  with  risk  and portfolio  management  strategies.  Markets  cannot  be  timed.  But,  with  some  basic  investment strategies and technical knowledge, one can make the most of a bear market.

Dollar cost averaging (DCA) is one of the great approaches to follow in a bear market. DCA is when  an  investor  consistently  invests  money  in  nearly  equal  quantities  throughout  time.  This approach helps to balance out the purchase price over time. It prevents one from investing all of their  money  into  any  crypto  and  avoids  the  chance  of  huge  losses.  This  strategy  encourages diligent saving by increasing the portfolio balance even as the crypto is falling.

Another approach is through portfolio diversification. Diversification in this context refers to the crypto portfolio's exposure to DeFi ecosystems. Investing is not limited to crypto spot markets. There are DeFi ecosystems that offer yields on multiple cryptocurrencies. It is also known as yield farming. For example, investors can deposit their ETH in the DeFi protocol Aave and enjoy fixed yields on their holdings.

Bear markets put all investors to the test. While these times are tough to bear, history indicates that the market will likely rebound quickly. And, if one is investing for the long term, the bear markets will be remembered for the wealth gained along the way.

The Healthy Side of a Bear Market

While downturn markets are usually painful for people, they do not stop developments from happening. The latest bear market, for example, was harsh, but new ETH addresses did not decline considerably. There was just a 12% reduction. Furthermore, Arbitrum's, which is a layer 2 blockchain, witnessed its daily on-chain transactions rising. This has been the case since the 2017 mega-bear market that gave birth to today's best-performing DeFi protocols.

Bear markets also allow builders to refocus their efforts on building their products into a better version as there’s less noise of projects with poor fundamentals trying to pull the good ones down. Long-term thinking, hard labor, and planning have more room to reign supreme in a lean bear market. Similarly, bear markets clear the market of weaker projects that frequently operate as dead weights, distractions, or outright scams. It brings out genuine builders and projects that create something of great utility.

Umami, for example, is a utility project being developed during this bear market. It is a DeFi protocol that provides strategy vaults that create long-term, risk-adjusted returns on core crypto assets such as $USDC, $BTC, and $ETH. Exeno is another example of a project that provides utilities through its crypto-commerce platform. The platform is an online marketplace that offers a diverse range of products by allowing customers to pay in crypto. The platform is powered by its native exeno coin (EXN) which will be available through an IEO in mid september that investors can acquire at a discounted price.

Bear Markets are the Gateway to Bull Market Fortunes

Bear  markets  provide  more  opportunities  than  bull  markets,  and  only  those  who  see  them through the lens of a disciplined investor can take advantage. A lot of factors go into analyzing the  opportunities.  It  is  a  skill  that  can  be  learned  by  understanding  the  basic  investment principles  and  crypto  fundamentals.    Bear  markets  are  absolutely  important,  not  just  for investing,  but  also  for  clearing  out  scams  and  poor  projects.  It  brings  actual  builders  and projects to the spotlight, giving the crypto industry much-deserved recognition. In other words, it is the only gateway into the bull market fortunes

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This article is sponsored by Venture369